Thinking about walking away from my mortgage...need advice...

[Paladin69]

Minnesota, where the house resides, is a non-recourse state. A HELOC exists which I guess can bring a deficiency judgement. That lien is with a different bank (US Bank) than the primary mortgage (Wells Fargo). Not worried so much about my ability to pay the HELOC off. But the primary mortgage is making me nervous. Bought the house in 2002 at 144K. Mortgage has been worked down to 100K. 2013 says the home value will now be worth 80K. If I drop to 60K in 2014 then I feel I will need to do something.

I can't do HARP 2.0 because I used HARP 1.0 which only reduced me from 6.25% to 5.625%, not even a whole point. I can't refinance because of equity reasons obviously.

I can't do HAMP because I try to be a good person and make my payments. I've never missed one. Really fucking annoyed at how this debt system works.

Short sale I hear might be an option but I don't really understand how that works? I really just want to hand over the keys and be free from this shitty mess if things get any worse...

[torchbearer]

Short sale I hear might be an option but I don't really understand how that works? I really just want to hand over the keys and be free from this shitty mess if things get any worse...

You will most likely need the permission of the mortgage holder to do a short sell, and they probably won't go for it unless you've been deliquent for awhile... and they are looking to cut their losses.
bankruptcy is another route to consider also if you find you are holding more debt than you can bare.

[jllundqu]

Search "Strategic Foreclosure"

I would do it in a heartbeat. The bank would kick your butt to the curb in a second if it helped their bottom line! If you can handle the ramifications of a foreclosure, lock it up, move out, and really inform the bank of your intentions.... then just hand them the keys.

[Jordan]

If you walk away, can you find a similar place to live at a monthly price less than or equal to your current mortgage payment? Give us more information. Are you struggling to pay the mortgage each month? Do you fear you won't be able to in the future? Or is this purely strategic - getting out of an underwater home at a relatively high interest rate?

If this helps, know that you can get approved for a mortgage 2 years after walking away.

[Paladin69]

If you walk away, can you find a similar place to live at a monthly price less than or equal to your current mortgage payment? Give us more information. Are you struggling to pay the mortgage each month? Do you fear you won't be able to in the future? Or is this purely strategic - getting out of an underwater home at a relatively high interest rate?

If this helps, know that you can get approved for a mortgage 2 years after walking away.

I was laid off in 2009 up in Minnesota and had to take a job in Texas (renting down here). To keep the house I quickly got renters in there...after association fees and other insurance I barely break even. Now it is considered a investment property because of the renters...but that was just so I wouldn't have to lose it. I couldn't afford to pay rent and pay a mortgage at the same time otherwise.

My desire to get out, at the moment, is purely strategic. If I can't get renters up there then I would definitely be in trouble.

[Guitarzan]

I did a short sale on my house last year in Florida.

I hired an attorney that cost me $1200, and he handled the negotiations.

We bought our house in 2004 for $175,000, always paid on time, and had a balance left of $156,000. House ended up selling for $125,000, which the bank accepted (finally), and they agreed to waive the deficiency balance.

It's true that a bank generally won't consider you for a short sale unless you're behind at least 2 payments. We just stopped making payments and sent the bank a hardship letter explaining our situation, which was that we had a career opportunity that we had to accept that required a relocation. From there, we hired a real estate agent who listed the home as a short sale. We got an offer and then played the waiting game. After about 4 months, the bank finally accepted.

It was tough, and required a patient buyer, repeat faxing of bank statements, paychecks, tax returns etc...but hiring the attorney was well worth it as we didn't have to deal with any type of collection calls.

I think if you have a reasonable hardship, and a buyer lined up with an offer that is in line with the value, the bank will accept the short sale. I'd try it prior to just turning in the keys.

[Paladin69]

I did a short sale on my house last year in Florida.

I hired an attorney that cost me $1200, and he handled the negotiations.

We bought our house in 2004 for $175,000, always paid on time, and had a balance left of $156,000. House ended up selling for $125,000, which the bank accepted (finally), and they agreed to waive the deficiency balance.

It's true that a bank generally won't consider you for a short sale unless you're behind at least 2 payments. We just stopped making payments and sent the bank a hardship letter explaining our situation, which was that we had a career opportunity that we had to accept that required a relocation. From there, we hired a real estate agent who listed the home as a short sale. We got an offer and then played the waiting game. After about 4 months, the bank finally accepted.

It was tough, and required a patient buyer, repeat faxing of bank statements, paychecks, tax returns etc...but hiring the attorney was well worth it as we didn't have to deal with any type of collection calls.

I think if you have a reasonable hardship, and a buyer lined up with an offer that is in line with the value, the bank will accept the short sale. I'd try it prior to just turning in the keys.

Thanks for the information on your personal situation. What were the taxes like on your short sale?

[Guitarzan]

Thanks for the information on your personal situation. What were the taxes like on your short sale?

Fortunately there are no taxes owed on the deficiency. The Mortgage Forgiveness Debt Relief Act of 2007 allowed for the IRS to waive deficiency balances for short sales and not consider that 'income'.

Unfortunately, that law changes as of Jan 1, 2013, and you will owe income tax on any deficiency after that date.

[Tiger35]

Can Wells produce the note?

[dannno]

Can Wells produce the note?

Ya, there's a chance you could stop paying and keep the house.